Egyptian pound strengthens in black market after volatile week

 Egypt's pound held steady at a central bank dollar sale on Thursday, while black market prices were volatile but generally stronger, traders said.

The bank offered $40 million on Thursday and said it had sold $37.6 million at a cut-off price of 7.1401 pounds per dollar, unchanged from its last sale on Wednesday.

The price of dollars at the thrice-weekly auctions has stayed in a very tight range since the beginning of June, after the bank allowed the pound to weaken in May.

The rates at which banks are allowed to trade dollars are determined by the results of central bank sales, giving the bank effective control over official exchange rates.

In the unofficial market, the pound was trading at 7.55 according to one trader, who said he had sold dollars for 7.57 pounds on Wednesday. Another trader said he was trading pounds at 7.65, stronger than his Wednesday rate of 7.67.

The strengthening came a day after the head of the central bank said he would take measures to calm the black market, but did not give details or a timetable for the measures.

Overall at midday on Thursday, the pound seemed stronger than Wednesday at the same time, when one trader quoted the pound trading at 7.75 to the dollar.

The pound has fluctuated this week due to a surge in commercial demand for dollars and concerns over Egypt's plans to repay a $2.5 billion Qatari deposit.

A fixed income trader at an Egyptian bank cited several factors contributing to the volatility, including jitters over the repayment to Qatar, although new developments may help cool political tensions between Cairo and Doha.

Egypt on Wednesday welcomed a call by Saudi Arabia to back an agreement among Gulf Arab states that ended an eight-month dispute over Qatar's support for the Muslim Brotherhood and promotion of Arab Spring revolts.

Elected President Mohamed Mursi of the Muslim Brotherhood was removed from power in Egypt by the army last year following mass protests against his rule.

"It's a mix of factors affecting black market rates and at the end of the day no one can confirm exactly what happened because it is not a transparent market," said the trader.

Related Articles

Back to top button